Wall Street's Trump 2.0: Slowdown and Surprises
The start of "Trump 2.0" has not aligned with Wall Street's expectations. Dealmaking in January hit its lowest monthly rate in over a decade. A tax break for hedge funds and private equity firms faces scrutiny. Big banks have faced grilling over "debanking" accusations.
Antitrust regulators have signaled stricter enforcement, blocking a merger between Hewlett Packard and Juniper Networks. Tariff uncertainties have created hesitation in business decisions and borrowing costs.
UBS CEO Sergio Ermotti acknowledges uncertainties, but emphasizes the importance of longer-term perspectives. High corporate valuations may also contribute to the slowdown in dealmaking.
Despite the setbacks, big bank stocks have outperformed the market, with JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo rising between 12% and 15%. Bank of America and Morgan Stanley have gained 6% to 9%.
Unexpected Heat on Wall Street
Wall Street has faced unexpected political scrutiny under Trump 2.0. President Trump has publicly confronted Bank of America CEO Brian Moynihan over allegations of "debanking" individuals for their beliefs or involvement in the crypto industry. JPMorgan Chase CEO Jamie Dimon was also mentioned in the confrontation.
The GOP has continued to highlight the issue in Senate and House hearings, with Massachusetts Senator Elizabeth Warren expressing support for the concerns. Banks remain optimistic that resolving the issue could lead to regulatory relaxations.
Additional Industry Developments
Industry lobbyists are urging for clarity and regulatory changes to address the "debanking" issue. The White House has also signaled intent to close a tax break known as the carried interest deduction, which benefits private equity and hedge fund managers.